$2.9 Million Jury Award For Texas Fracking Claim: Lessons for Energy Company Risk Managers


A jury in Dallas recently awarded $2.9 million to a Texas family in one of the first trials involving allegations that hydraulic fracturing caused nearby residents to suffer health problems and property damage. Although commentators were quick to point out that there was no evidence that fracking actually caused the plaintiffs any injury, the jury’s verdict contains an important lesson for the discerning energy company risk manager: regardless of the scientific support for the alleged dangers associated with the process, there may be greater risk of thirdparty liability associated with fracking than many in the industry have expected. If they do not want their companies stuck footing the bill, risk managers working in the energy space should consider how their insurance portfolio might address this unexpected liability and be prepared to challenge insurer coverage denials if warranted.

In Parr v. Aruba Petroleum Inc., the Parr family, who owns a 40-acre tract of land in Wise County, claimed that Texas-based Aruba Petroleum exposed them to hazardous gases, chemicals, and industrial wastes through the operation of 22 nearby gas wells. They alleged that they had suffered from a host of medical problems since Aruba began drilling in 2008, including nosebleeds, rashes, and vomiting. The Parrs sued Aruba and a handful of other Barnett Shale drillers in 2011, asserting claims for negligence, trespass, and nuisance.

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